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Hostel operator Safestay (LSE:SSTY) reported a significant 23% increase in first-half EBITDA on Thursday, reflecting notable strides in operational performance and expansion of its portfolio.
For the first six months of the year, Safestay achieved a 6.6% rise in revenue, reaching £10.7 million, up from £10 million in the same period of 2023. This increase was driven by enhanced direct sales and stringent cost management. Adjusted EBITDA from continuing operations surged to £3.2 million, up from £2.6 million year-on-year, improving the EBITDA margin to 30% from 26% the previous year.
The company also reduced its pre-tax loss to £0.11 million, a marked improvement from the £0.95 million loss reported in the first half of 2023. Profit after tax turned positive at £63,000, reversing the £1 million loss experienced in the previous year.
A successful refinancing deal with HSBC in January contributed to these results, with Safestay securing a £16 million five-year term loan and a £2.5 million revolving credit facility, which supports long-term growth objectives.
The company reported a 6% increase in bed nights, totaling 412,442, while occupancy rates approached pre-pandemic levels at 70.6%. Revenue per available bed (RevPAB) grew by 3.2% to £18.28, supported by increased ancillary sales. Although the average bed rate (ABR) decreased by 4.5% year-on-year to £22.15, it remained above pre-pandemic levels.
Safestay’s expansion strategy added four new sites in 2024, including the Edinburgh Cowgate Hostel, opened in June. The company also secured its first management contract for a 120-bed resort hostel in Calpe, Spain, and acquired two additional properties in Cordoba, Spain, and Brighton, UK, which are being converted into hostels. In August, Safestay further expanded by adding a leasehold property in Budapest, Hungary.
Chairman Larry Lipman highlighted the strategic progress made in 2024, noting the addition of new properties in Spain and Brighton, and entry into the Budapest market. He emphasized that Safestay continues to drive organic growth, which supported the 23.1% increase in adjusted EBITDA during the first half of the year.
Lipman also noted that the company’s portfolio now comprises 20 sites, with 17 currently operational in prime locations across Europe. Safestay remains focused on identifying and evaluating new opportunities for growth, leveraging its established position in the global hostel market.
As of 1126 BST, Safestay shares had risen by 13.04% to 26p.
